It’s been one hell of a bull market and now most people are acknowledging what will be a tough 2022 and maybe 2023. It’s very hard not to worry about “missing out” on a big market recovery or getting on the “new thing” early to make money. It’s not the end of the world but we are likely to be going through a “choppy” time for a while.
Part of the reason it’s so hard to stop thinking about “missing out” is the market reaction to COVID back in March of 2020. I was very, very concerned about the market and the US economy when the news hit. I wasn’t alone as the market took a very steep dive - the $QQQ dropped 27% from $235 to $172 in a little over a month.
But that “scary moment” was a massive buying opportunity. The $QQQ proceeded to rocket up from those low levels to top $400 in less than two years - a staggering 132% return. In recent memory “buying the dip will make you rich” is the mantra that resonates.
There are multiple reasons to reconsider this approach right now - not the least of which is that the $QQQ is at $333 so down only about 17%. Personally, I think that growth expectations and margin forecasts are way too high for this year and valuations remain stressed. But I am not a “macro guy” and continue to focus on individual stocks.
If you build models you’ll notice the anomaly that COVID created. We had artificially low numbers in 2020 which made for easy comparisons and incredible growth along with margin expansion for 2021. But then you roll into 2022 and it’s obvious that one needs to smoothen out the numbers to account for the massive COVID shock to the economy and consumer behavior.
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